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MTD: HMRC webinar provides more details

26th Feb 2018
Tax Writer Taxwriter Ltd
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Rebecca Cave tuned in to the HMRC webinar for tax agents on MTD for business to see if the questions tax agents have been raising were answered.

Focus on VAT

The webinar started by dispelling the myth that MTD for VAT would be postponed. Mel Stride, the Finance Secretary to the Treasury, who has responsibility for HMRC, is determined that there will be no further slippage in the MTD for business timetable.

This webinar focused on MTD for VAT, and we were promised future webinars dealing with MTD for other taxes in due course.   

Who is in and when?

VAT-registered traders with annual VATable turnover in excess of £85,000 (the VAT registration threshold) will be required to enter into the MTD regime from the first VAT period (not accounting period) that begins on or after 1 April 2019.

The professional accountancy bodies are still pushing for the commencement date for each business to be the start of their accounting year which falls on or after 1 April 2019. Using the VAT return period as the trigger to enter MTD will mean many businesses will have to switch to MTD reporting, and possibly to new MTD-compliant software, part way through an accounting period. This is not ideal. No business wants to change accounting software part way through the accounting period.

The turnover which is counted as part of the £85,000 threshold for MTD is only those sales which are subject to VAT, but including zero rated sales. Where the business makes sales which are exempt from VAT or outside the scope of VAT, that exempt or outside the scope turnover is not counted towards the threshold for determining whether the MTD is mandatory for that business.

A business whose VATable turnover is currently under £85,000 will have to come into MTD for the start of the next VAT period after its turnover has exceeded £85,000. It will also have to register for VAT if it is not already registered. The threshold of £85,000 therefore needs to be checked every month on a rolling basis, even for businesses which have registered for VAT on a voluntary basis.

HMRC will encourage VAT-registered businesses that have registered voluntarily to join the MTD regime before they are required to do so. But if the turnover of a business falls below £85,000, it must stay within the MTD regime until it deregisters from VAT.

Who is exempt?

Businesses will be exempt from the MTD regime if they are:

  • subject to insolvency procedures;
  • entirely run by practising members of a religious society whose beliefs prevent them from using computers; or
  • it is not reasonable/practical.

The HMRC speaker was at pains to point out that the third category of exemption may include problems with accessing the internet or computer equipment due to age, disability, or the remoteness of the business location, but other factors could be relevant. Any business already exempt from online filing of VAT returns will automatically be exempt from the MTD regime.

A business which wants to claim exemption will need to contact the VAT helpline to discuss their circumstances, or their tax agent can do this for them. HMRC will provide what they call assisted digital service, which may be a light-touch approach or more intensive. HMRC believes that only a small number of businesses will be referred to an enhanced support service that will give intensive support over the phone or possibly face-to-face. 

Support for businesses

Part-way through the webinar HMRC held a poll to ask whether clients knew about MTD for business: 75% said most clients knew little about MTD and will rely on their tax agent. The number of businesses that will find it difficult to use MTD-compliant accounting software may be much larger than HMRC envisages.

HMRC says it will provide general support to businesses for MTD in the following ways:

  • MTD guidance on gov.uk
  • MTD guidance in accounting software
  • Phone helplines and webchat
  • On social media such as Twitter
  • Online learning such as webinars and videos

Where a business really cannot cope with its MTD obligations, a non-digital means of submitting the VAT return will be provided. Although it was not mentioned in the webinar, AccountingWEB understands that the current online form for submitting the VAT return will be retained for VAT-registered businesses who are not mandated into the MTD regime.

MTD pilot

The live testing of MTD-compliant software will start in April 2018. HMRC will invite businesses to join the pilot, drawing from the list of those that have applied. The simplest businesses will be asked to join first, more complex businesses will be invited to join as the pilot program goes. Agents will also be invited to take part in the pilot, subscribe clients into MTD, and submit VAT returns on their behalf.

The HMRC speaker did not define what she meant by simplest businesses and more complex businesses. However, she said that in due course the pilot programme would be opened to all VAT-registered businesses, and at that stage businesses will join through a portal on gov.uk, not by invitation.

It should be noted that the majority of businesses that take part in the pilot programme won’t complete a full year of VAT returns submitted under MTD before the MTD regime becomes compulsory in April 2019.

Software

HMRC will not provide free software to allow businesses to comply with their MTD obligations. All businesses will be expected to use commercial software or to develop their own in-house bespoke software to comply with MTD.

HMRC is working with large number commercial software providers in a test environment, and the majority expect to have software ready for the MTD pilot programme. Businesses that use bespoke software need to register with HMRC as a software developer to gain access to the APIs to write into their own bespoke software.

Future information

This webinar will be run again on 6 March 2018 at 12.30pm and 2.30pm. Questions can be submitted in advance to [email protected], include "MTD for business" in the subject line of your email, or post your questions below and we will forward them to the MTD team at HMRC.

Replies (45)

Please login or register to join the discussion.

Locutus of Borg
By Locutus
26th Feb 2018 17:32

What is the point of MTD again? I think I missed that bit.

What does it do that the current electronic system doesn't?

Thanks (8)
Replying to Locutus:
Hallerud at Easter
By DJKL
26th Feb 2018 22:35

Refreshes the parts other systems cannot reach?

I think I am getting far too old for all this fun, will now log on to my SIPP to see if doing nothing is nearer being a possibility, life is just too short for all this c***.

Thanks (11)
Replying to Locutus:
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By John Marshall
28th Feb 2018 15:47

The version of webinar I saw opened by saying that MTD will reduce the tax gap. A load of old utterly deluded tosh...

Thanks (0)
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By SpreadsheetUser
27th Feb 2018 09:52

I don’t care what they say now, no way will this be ready for next year.

And weren’t we told before that MTD full fat version was always going ahead as planned?

Thanks (3)
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By juzza07
27th Feb 2018 14:33

Was there any information for Excel users on how they will interface with MTD i.e how they will duplicate their VAT Return to HMRC by doing another return to HMRC in the name of MTD?!?
Will that interface be chargeable?

Thanks (0)
Replying to juzza07:
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By chatman
28th Feb 2018 10:24
Thanks (2)
Replying to chatman:
Dog
By ClaireB
28th Feb 2018 13:30

Perfect! Thank you for linking to that.

Thanks (1)
Replying to juzza07:
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By annmd
28th Feb 2018 11:06

Hi,
Here's an article based on the HMRC's webinar that clarifies the Excel spreadsheet use for MTD:
https://www.accountalitics.co.uk/2018/02/14/worried-mtd-questions-answered/
Thanks

Thanks (1)
Replying to juzza07:
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By djtax
13th Mar 2018 17:31

The issue of Excel was skimmed over and specific questions (from me and others) went unanswered. HMRC claim they are currently 'in discussion' with 'software providers' over bringing in 'bridging' software to allow businesses to continue to rely primarily on spreadsheet records. Quite how this will work remains a mystery. I spent a lot of time pursuing this (via ICAEW and CIOT etc) to find that no such software yet exists! Yet we are invited to join the trial from next month! Those in their London ivory towers are seriously underestimating how many (mostly smaller) businesses are affected by this. Cloud cuckoo land....

Thanks (0)
Replying to djtax:
Morph
By kevinringer
14th Mar 2018 07:11

djtax wrote:

Cloud cuckoo land....

CLOUD cuckoo land indeed - that expression could have been invested for MTD.
Thanks (0)
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By JSinden
28th Feb 2018 10:13

I listened to the webinar and asked a question which was not answered.

We were told that the MTD submissions will need to include details of all individual sales invoices. How will we deal with retailers, cafes, hairdressers etc.? We record daily, weekly or even sometimes monthly takings figures for these businesses into the records. There is no way we can record each individual transaction.

Any ideas?

Thanks (2)
Replying to JSinden:
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By RogerMT
28th Feb 2018 10:46

Common sense dictates that cash businesses will not have to record each transaction individually, as cash business are not invoicing each sale. Am I being too optimistic?

Thanks (1)
Replying to RogerMT:
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By JSinden
28th Feb 2018 13:30

Are they going to insist on daily takings figures or can we get away with a weekly or monthly total?

Thanks (0)
Replying to JSinden:
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By annmd
28th Feb 2018 11:08

Hi,
It appears that there is a preference for all digital records:
https://www.accountalitics.co.uk/2018/02/14/worried-mtd-questions-answered/

Thanks (0)
Replying to JSinden:
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By ralan
07th Mar 2018 11:10

I asked a similar question and the response seemed to indicate you carry on recording daily sale in total but nothing definite. Indeed I found the whole webinar to be full of holes and nothing definite decided, the person answering the questions would make a good MP as he never seemed to give a straight answer.

Thanks (0)
Replying to ralan:
Tornado
By Tornado
07th Mar 2018 11:29

I think there is a difference here in that MP's often do know the answer but do not want to tell us what it is, but the webinar hosts do not know what the answer is in the first place and probably no one else in HMRC knows either!

Thanks (2)
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By AndrewV12
28th Feb 2018 10:18

Pity the VAT limit is not £120,000.

Thanks (1)
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By propraxis
28th Feb 2018 10:32

Hi,

I would like to know the time scales for those businesses that are voluntary VAT registered and will still be UNDER the VAT threshold after the 1 April 2019 date and are not likely to ever exceed the VAT threshold. Is there a published date for all VAT registered businesses to switch to MTD?

It is a shame that HMRC will not be offering free software as they do for PAYE through their Basic Tools.

Thanks (2)
Tornado
By Tornado
28th Feb 2018 10:36

Mel Stride is new to this.

As soon as he realises that the flow of VAT funds into the Treasury coffers is likely to reduce to a dribble as people grapple with the Brexit and MTD changes at the same time, thus preventing him from being able to pay the Country's bills, he will soon change his mind.

Voluntary MTD for VAT - probably

Mandatory MTD for VAT - not a snowball's chance in hell

Thanks (4)
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By RogerMT
28th Feb 2018 10:42

What happens if the VAT registration limit comes down between now and April 2019, as is the current government's intention I'm sure, given lower tax takes post-Brexit.
Presumably this £85K limit for MTD will come down with it.

Thanks (1)
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By proactivepaul
28th Feb 2018 11:01

It appears that VT are not going to be implementing MTD for VAT as per . . .

http://www.vtsoftware.co.uk/hottopics.htm

so, two questions . . .

1. why is a popular software house not doing this?
2. what will VT users be using instead?

Thanks (0)
Replying to proactivepaul:
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By accountsdragon
28th Feb 2018 11:04

I love VT but have not bothered investigating alternatives until we have a better idea of what is really going to happen and what will be on offer.

Thanks (2)
Replying to proactivepaul:
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By accountsdragon
28th Feb 2018 11:05

I love VT but have not bothered investigating alternatives until we have a better idea of what is really going to happen and what will be on offer.

Thanks (0)
Replying to proactivepaul:
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By chatman
28th Feb 2018 11:18

I will be using this for my VT clients http://www.neilsonjamestech.co.uk/

Thanks (0)
Replying to chatman:
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By acceje
28th Feb 2018 15:16

Thanks for sharing - this is exactly what I was looking for as I am a VT user.

Thanks (1)
Replying to proactivepaul:
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By adjadj
28th Feb 2018 18:29

This is what VT said

Making tax digital

VT Transaction+ will not be implementing MTD for VAT directly. The 2018 edition (due shortly) will include a feature to export the numbers in a VAT return to the Windows clipboard (a bit like Copy and Paste). It is expected that a number of third party apps will be able to accept this data and file the VAT return with HMRC.

Thanks (0)
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By Arbitrary
28th Feb 2018 11:16

Thank you, Rebecca, for listening to the Webinar; it does not look much of an update from HMRC. I thought we already knew what was said Is there anything new (or helpful) at all in this?
Is this really going to happen? GDPR then MTD, what next It's clearly going to be seamless like exiting the EEC. Aaaaarrrrgh! Sole practitioner nightmare.
HMRC's 'No slippage' is peculiarly relevant today as I look out of the window.

Thanks (2)
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By Ammie
28th Feb 2018 11:25

Words are beautifully simple and slip of the tongue so smoothly, particularly when spoken by authority that explain the ease of implementing MTD as if it's a mere minor adjustment in the life of a business.
When the obligation is on someone else its a pain free process, which authority has not a clue about.
I will wait and see what the repercussions will be.

Thanks (3)
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By johnjenkins
28th Feb 2018 11:55

I also listened and we are at the same point as we were this time last year. The only change is that Mel started off by saying he would prefer to have MTD done properly even if it meant a delay, now he is saying by hook or by crook it will be done. Good luck with that Mel.
Everything hinges on the software being ready and AFFORDABLE (affordability must be a reason why business can't join, especially if religion is one) by the due date. So once that has happened I presume the bugs will come to light. So there is no possible way that by April 19 it will be up and running for all.
Oh by the way did anyone else get caught out in the Beta VAT fiasco the other day???????????????????????????? Says it all.

Thanks (2)
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By Michael C Feltham
28th Feb 2018 12:15

Clearly, the - considerable - effort I expended on my response to HMRC's request for comments have, as might be expected, gone right over Stride's head and in one ear, through the vacuum between and straight out the the other side...

Here:

https://www.accountingweb.co.uk/tax/hmrc-policy/mtd-mix-and-match-of-vat...

These clowns (echoing an earlier poster). do not seem to grasp they are threatening Treasury's essential tax revenues, whilst Theresa the Appeaser et al, re committing mega billions to the EU, Government is sending Zimbabwe £5 million "To assist with a "democratic election" (Roll on the floor howling with laughter) and Government's insane profligacy is chucking our hard won taxes around like an octopus on speed!

Worse, as global interest rates are set to rise, significantly, Britain will have to go cap in hand to the Sovereign Risk market to raise even more money, when the country is already so over-leveraged it aint true!

This is the first time the UK Government is using a hugely flawed massive and complex IT system to RAISE rather than SPEND money.

Thanks (2)
Replying to Michael C Feltham:
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By johnjenkins
28th Feb 2018 13:39

Michael, do you have a monitor techno digimon of an octopus on speed?
Seriously though HMRC would've got quite a bit of dosh in at end of Jan and this month as shareholders have to fork out divi tax and 50% towards this years.

Thanks (0)
Morph
By kevinringer
28th Feb 2018 12:47

The MTD pilot is starting April 2018? So what happened to the pilot that actually started spring 2017? Has HMRC published their findings? HMRC had expected 400,000 businesses to participate in the 2017 pilot so there should be something from HMRC. I've been told that the number of participants was only a couple of dozen ie about 1% of 1%.

Thanks (1)
Tornado
By Tornado
28th Feb 2018 12:58

"There's too many men
Too many people
Making too many problems
And not much love to go round
Can't you see
This is a land of confusion."

More like a land of delusion, but thanks to Genesis for some apt words of wisdom.

A little more love and compassion would be nice.

Thanks (1)
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By DMBAcc
28th Feb 2018 13:04

I only have two VAT registered clients. One uses a simple spreadsheet and the other a system once called CO$H given to them by one of the major banks. The wife completely understands this simple system AND I can get all the reports I need out of it to produce the VAT return. What CO$H can't do is work out the stastical figures which form part of the VAT return ( I use a simple spreadsheet to do this) but the actual VAT on inputs and outputs is correct. Now this takes me a couple of hours because I use the opportunity to complete a bank rec and check accuracy of input (by sample). HMRC get a correct tax return and my client pays their tax on time. So everyone is happy? Yes? Final Accounts are relatively simple for me since each quarter is checked timely. Client is happy as they use a free stand alone system which is simple to use and HMRC get the tax due NOT some dreamed up reduced figure they are accusing me (and every other accountant in the UK) of. So will someone kindly tell how I advise my client. I do not use commercial software and have no working knowledge of such. How does he choose the software to use and who trains him? Can we plead ignorance and suggest we continue as we are since at present all seems to be working fine? How do I tell him things will now improve with MTD when not one single person can tell me how this benefits HMRC leave alone the UK as a whole. I just want some REAL help from someone. Sadly I shall be one of those next April still wondering where to go to get some REAL AND IMPARTIAL (and free) advice as to how to do MTD at minimal risk to my client's business. I wonder if we shall see businesses collapse on the back of this? What I NEED is real help from HMRC who are forcing this change not edicts via the internet. PLEASE. My final conclusion is that this mess has been contrived so that many penalties can be issued to improve the Treasury's income.

Thanks (2)
Replying to DMBAcc:
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By Agutter Accounts
28th Feb 2018 17:31

I know exactly what you are experiencing. I have only small business clients too - just three who do VAT, one of them voluntary, two over the threshold. I take the opportunity like you, to update accounts quarterly.

If I need special software, it needs to be cheap and simple. Neither I nor my clients can afford the usual mainstream stuff from the big software houses. I use spreadsheets so if it a special spreadsheet then that's all I need. Nothing fancy.

Thanks (0)
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By DMBAcc
28th Feb 2018 13:04

I only have two VAT registered clients. One uses a simple spreadsheet and the other a system once called CO$H given to them by one of the major banks. The wife completely understands this simple system AND I can get all the reports I need out of it to produce the VAT return. What CO$H can't do is work out the stastical figures which form part of the VAT return ( I use a simple spreadsheet to do this) but the actual VAT on inputs and outputs is correct. Now this takes me a couple of hours because I use the opportunity to complete a bank rec and check accuracy of input (by sample). HMRC get a correct tax return and my client pays their tax on time. So everyone is happy? Yes? Final Accounts are relatively simple for me since each quarter is checked timely. Client is happy as they use a free stand alone system which is simple to use and HMRC get the tax due NOT some dreamed up reduced figure they are accusing me (and every other accountant in the UK) of. So will someone kindly tell how I advise my client. I do not use commercial software and have no working knowledge of such. How does he choose the software to use and who trains him? Can we plead ignorance and suggest we continue as we are since at present all seems to be working fine? How do I tell him things will now improve with MTD when not one single person can tell me how this benefits HMRC leave alone the UK as a whole. I just want some REAL help from someone. Sadly I shall be one of those next April still wondering where to go to get some REAL AND IMPARTIAL (and free) advice as to how to do MTD at minimal risk to my client's business. I wonder if we shall see businesses collapse on the back of this? What I NEED is real help from HMRC who are forcing this change not edicts via the internet. PLEASE. My final conclusion is that this mess has been contrived so that many penalties can be issued to improve the Treasury's income.

Thanks (0)
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By pauljohnston
01st Mar 2018 10:50

I for one am pleased that HMRC is not providing any software. If it did all taxpayers would have to pay for it. All other bits of software we have to buy for our businesses so why not tax software.

Thanks (0)
Replying to pauljohnston:
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By johnjenkins
01st Mar 2018 11:40

We already pay for commercial software to send returns to HMRC why should we be forced to pay for additional software on the premise that we will make less errors?

Thanks (1)
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By Snowstorm
01st Mar 2018 17:00

"HMRC will not provide free software to allow businesses to comply with their MTD obligations. "

You know, I'm sure that earlier on they said they *would*, at least for small businesses. In fact, looking back to a January 2017 press release and consultation response,
https://www.gov.uk/government/news/digital-tax-revolution-moves-a-step-c...
and
https://www.gov.uk/government/publications/making-tax-digital/summary-of...

they explicitly promised that the necessary free software will be available to 'businesses with the most straightforward affairs' and 'to the majority of the smallest businesses'.

When did that change, why, and who did they consult?

Thanks (1)
Replying to Snowstorm:
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By johnjenkins
02nd Mar 2018 10:16

HMRC consulting. Now there's a phrase to brighten up a cold day.
They tell you what they are going to do then invite comments. If the comments suite them then they will use them.
I actually can't wait for this disaster to start.

Thanks (0)
Replying to Snowstorm:
Morph
By kevinringer
02nd Mar 2018 10:19

Yes, HMRC said there will be free software but no, HMRC have never said they will supply it. HMRC have always expected the software industry to supply the free software. HMRC set a standard for the free software: the free software is not required to handle VAT so there is no guarantee there will be any for MTDfV. Why would a commercial supplier supply free software? Maybe it contains adverts? Maybe it has limited functionality (eg no VAT)? Maybe support is only through a premium rate phone number? There's got to be something in it for the supplier therefore at the end of the day the taxpayer will end up paying something for the 'free' software.
In one way I'm glad HMRC are not supplying software because their other software is rubbish eg PAYE Basic Tools. However I feel that the burdens on small businesses, especially startups, are big enough without having the extra cost in money and time of complying with MTD.

Thanks (1)
Replying to Snowstorm:
By Rebecca Cave
09th Mar 2018 17:08

HMRC promised there would be free software for INCOME TAX element of MTD for simple unincorporated businesses which had no employees and who were not VAT registered.
The MTD we are looking at to start in 2019 is only for VAT registered businesses with turnover over £85,000 , so by definition are not small ( in HMRC's view).

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By pauljohnston
08th Mar 2018 13:45

Kevin I think that you are being a little unrealistic. The costs of software are tiny when compared with the other running costs of a business. What takes time and costs a lot more is getting use to new software and a new system.

HMRC employees get training at our expense so dont expect HMRC to understand this. I am begining to feel that if HMRC was totally outsourced the outsourcing company even if it were Capita would do a much better job that what we have to deal with now.

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By L Haldane
08th Mar 2018 17:26

What use is the pilot if it excludes everyone who is using spreadsheets ????

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Replying to L Haldane:
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By johnjenkins
09th Mar 2018 08:59

What use is the pilot that won't be ready in 3 weeks.

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